1. Mary Jarvis is a single individual who is working on filing her tax return for the previous year. She has assembled the following relevant information:

• She received $129,000 in salary.
• She received $14,500 of dividend income.
• She received $7,000 of interest income on Home Depot bonds.
• She received $24,500 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $9,800.
• She received $10,000 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $4,100.
• Mary only has allowable itemized deductions of $4,100, so she will take the standard deduction of $12,000 will be deducted from her gross income to determine her taxable income.

Assume that her tax rates are based on Table 3.5.

1. What is Mary's federal tax liability? Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to the nearest cent.

   $

2. What is her marginal tax rate? Do not round intermediate calculations. Round your answer to one decimal place.

   %

3. What is her average tax rate? Do not round intermediate calculations. Round your answer to two decimal places.

   %

2.

Byron Books Inc. recently reported $9 million of net income. Its EBIT was $21.5 million, and its tax rate was 25%. What was its interest expense? (Hint: Write out the headings for an income statement, and then fill in the known values. Then divide $9 million of net income by (1 - T) = 0.75 to find the pretax income. The difference between EBIT and taxable income must be interest expense. Use this same procedure to complete similar problems.) Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest dollar, if necessary. Do not round intermediate calculations.

$